Annualized growth — and why short samples lie.
CAGR of a short or lucky period extrapolates nothing — annualizing three good months is the oldest marketing trick in trading.
Educational tool only — not financial advice. Verify figures with your broker.
The CAGR Calculator is a growth-rate tool that answers: what steady annual rate would take an account from its starting value to its ending value over a given number of years? It converts a start value, end value and time span into a single compound annual growth rate, plus the total return and an equivalent monthly rate.
CAGR = (ending value ÷ starting value) ^ (1 ÷ years) − 1. Total return is simply (ending ÷ starting − 1), and the equivalent monthly rate is (ending ÷ starting) ^ (1 ÷ (years × 12)) − 1. It smooths a lumpy journey into one constant annual rate, ignoring the volatility along the way.
A simple average adds up yearly returns and divides; CAGR (as this CAGR calculator computes it) is the compounded rate that actually links start to end, so it correctly accounts for the effect of gains and losses stacking. CAGR is the more honest figure for growth over multiple years.
You can mathematically, but it's misleading — annualizing three strong months implies they repeat all year, which they rarely do. This CAGR calculator will compute it, but a short or lucky sample extrapolates nothing.
No. CAGR only uses the start and end values, so two accounts with the same CAGR can have wildly different paths — one smooth, one through a 60% drawdown.
Keep in mind: CAGR only connects a start point to an end point — it hides the volatility and drawdowns in between, and annualizing a short or lucky period extrapolates nothing about future growth.